R&D Tax Claims: HMRC finally go-digital.

In February 2019 HMRC introduced an online tool to submit Research & Development tax relief claims (both SME and RDEC claims). It is still necessary to make the claim on a company tax return (form CT600), but the accompanying detailed R&D project information can (but does not have to) now be submitted by completion of an online form, instead of attaching a pdf report to the return.

So what are the benefits of HMRC capturing the data in this new way:

• Following a question and answer standard template format reduces the risk of companies omitting key information that HMRC will require. This should reduce occasions when HMRC request further information, and/or this consequence resulting in a formal aspect tax enquiry being opened.
• It should be easier now for HMRC to assess whether or not an R&D project qualifies for the enhanced tax reliefs. This may help in reducing the time it currently takes for HMRC to issue an R&D Credit related tax refund.
• Giving information to HMRC in this way is consistent with the direction of travel for UK tax administration; where posted forms and explanations are being replaced by standard e-submissions.

Although initial update of this new facility has been slow in first 6 months, any changes that make it easier for companies to claim what is arguably the most generous tax legislation on the UK statute book must be encouraged. As R&D tax relief is, effectively, funded from the EU purse, let’s not consider today what impact Brexit might have upon this.

Disclaimer - All information in this post was correct at time of writing.